New York Real Estate Foreclosure
Foreclosure filings went up in all five boroughs for Q1 – Q3 from 2008 to 2009, a total of 14% for all of New York City. While the numbers of actual foreclosures in places like East New York, Jamaica and Ozone Park are still higher, they are rising in higher-priced neighborhoods.
Sarah Ryley of The Real Deal did a great wrap up of the numbers, and notes that foreclosure numbers are rising in more middle-class brownstone and condo neighborhoods in Brooklyn, Queens, Staten Island and the Bronx- and that Manhattan’s quarterly foreclosure rate for the first three quarters of this year are up 108% in 2009, with many happening in the co-ops. With that said, 2008 had almost zero forclosures in NYC so you have to take 108% number with a grain of salt.
The overall trend is that foreclosures are beginning to hit high-end neighborhoods- often the result of unemployment and upside-down mortgages. The Real Deal also quotes Deutsche Bank as predicting underwater loans (market value being less than book value) are threatening to rise from 11% to 77% in the New York metro area by next year. Short sales on homes with underwater loans are not looked upon kindly by banks.
New York Foreclosures and Banks
Rising foreclosure numbers pull property values down when regular home sales end up competing with short sales and discounted properties, posing problems for everyone. Further, second and third lien-holders are freezing bank accounts and garnishing wages when homeowners go into default on a first mortgage.
A new law opens an intriguing option to banks: they can choose to lower the principal owed on a mortgage if the homeowner agrees to split profits on the resale of a property. In theory, this new option, along with the new rules, will entice banks to keep people in their homes rather than foreclose. In a practical move, banks can now be charged by the city for property maintenance as well if they don’t keep the property up.
In addition, the law broadened the requirement for banks to send a 90-day pre-foreclosure notice to all homeowners, as well as requiring lenders to participate in settlement conferences with homeowners monitored by the court. For rentals, banks now need to give tenants 90 day notice for evictions.
The growing number of options and enticements for banks to keep people in their homes through altered terms should have an effect on the growing number of foreclosures, but only time will tell the extent of that effect.
Source: The Real Deal
« New York Real Estate 2010 | Home | Manhattan Real Estate : Ken Friedman and Ace Hotel Speakeasy Jersey Joe’s »
Leave a Comment